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Home Secretary (Speech)

Volume 640: debated on Thursday 11 May 1961

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asked the Prime Minister whether the speech of the Secretary of State for the Home Department in Essex on Saturday indicating special treatment for the farmers in respect of the proposed payroll tax represents Government policy.

My right hon. Friend the Home Secretary pointed out that the payroll tax was being held in reserve. He used these words: "If it is imposed it may not be exactly in the form at present suggested". I think what my right hon. Friend had in mind was the Chancellor of the Exchequers statement that if this proposal became next year a permanent part of our defensive economic structure it may be possible to devise a more flexible system than the present one, which is necessarily based on the national insurance machinery.

I thank my right hon. Friend for that statement. Can he assure the country that the payroll tax as announced by the Chancellor of the Exchequer is to be retained for this year as an instrument for revenue-raising purposes, or am I right in assuming that it could be used on a selective basis, as many Ministers have suggested from time to time? The suggestion has given industrialists and other people generally cause for great apprehension. Can we have a firm statement as to what is intended?

I do not want to anticipate the debates on the Finance Bill, but I think this is the position. This is an instrument, a so-called economic regulator, which the Treasury and my right hon. and learned Friend the Chancellor of the Exchequer wish to have in their hands in case it is necessary to use it. It is hoped that, if it has to be continued as a permanent instrument, it will be possible to organise it in a more flexible and effective manner.

If the payroll tax is to be used, is it to be imposed in the form proposed by the Chancellor of the Exchequer or in the form now proposed by the Home Secretary?

It is clear that if it became necessary to use it this year it could be used only on the basis of the National Insurance Scheme, on which it is based. Therefore, any flexibility must be within the different categories of the National Insurance Scheme. If, as the Chancellor of the Exchequer indicated in his Budget speech, it were made part of what I might call the permanent instruments of economic regulation, it would be hoped in that period to devise a more flexible instrument.

Would it not have been better if this had been thought out before it was introduced?

It was useful to have this, like the other regulator. All this is to be debated in the Finance Bill and I do not want to waste unnecessary time.